Fairbanks Insurance Blog

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home remodeling contractors
18 December 2021

Home Remodeling Contractors Insurance

Homeowners hire remodeling contractors to complete a range of home improvement projects from renovations to additions, and handyman work. They trust you to provide them with a healthy end result that they can take pride in showing off to their family and friends.

 

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As with any industry, the construction industry is fraught with everyday risks that could financially devastate home remodeling contractors. To protect yourself and your business, you need to transfer these risks to highly-rated commercial insurance companies.

In this article, our intention is to help you identify the everyday risks that home remodeling contractors face while traveling to the job and while working at the job site.

 

Types of Risk that Home Remodeling Contractors Face

When you, your employees, or subcontractors enter a customer’s home, there are numerous risks just waiting to befall you. From minor property damage to severe bodily injury claims, here are the most common risks that home remodeling contractors must mitigate:

  • Property Damage – Sometimes residential remodelers need to balance ladders and use a lot of tools and materials. It can be easy to take a wrong step and have a piece of wood or drywall fall, damaging the customer’s belongings below.
  • Bodily Injury – Accidents can happen on home repair construction sites. When they occur, and you are found liable, you are financially responsible for the individual’s lost wages and medical expenses.
  • Faulty Materials – You can use the best material and still ruin a job. To avoid this, you need the right insurance. If your materials cause damage to a home, no matter how many jobs you’ve had with them, you could be held responsible.
  • Theft by Workers – Homeowners trust you. You trust your employees and subcontractors. But if your employees are tempted to take items that aren’t theirs, they must know that the homeowner will contact you when an item is stolen and hold you responsible.
  • Vehicle Accident – If you’re trying to back up your truck and instead back into the customer’s car in their driveway, then you’ll need to pay to replace or repair it.

 

How to Protect Your Remodeling Business from Everyday Risks

tool risk

As was mentioned earlier, the best way to reduce or eliminate your financial risk while traveling to a job, at the job site, or even after the job has been completed is to transfer your risk to a commercial insurance company using a package of coverages.

Here is What We Recommend:

General Liability: Contractors General Liability will be the foundation of protection for your business. The coverage will respond if you or your employees are found liable for bodily injury, property damage, or have a products/completed operations complaint. The coverage also covers defense costs for your business to respond to any lawsuits brought by a third party.

Workers’ Comp: Many states will require contractors to provide workers’ compensation coverage for their workers before they can begin a project. Accidents will happen at the job site that can result in an employee becoming injured and missing work. Your workers’ compensation coverage will provide financial assistance for medical expenses and lost wages.

Surety Bonds: Your state will likely require you to be licensed before you can begin operations. Most states and customers will require contractors to offer a license or surety bond before you are allowed to bid on a job or begin working.

Commercial Auto: Typically, most contractors will have light and heavy vehicles that require commercial auto insurance to make certain their vehicles can be repaired or replaced in the event of an accident, vandalism, or theft.

Tool Coverage: Also known as Inland Marine Insurance, this policy will provide for reimbursement for expenses to repair or replace tools and equipment. Your tools represent an important part of your livelihood, so we always encourage carpentry contractors to consider this valuable coverage.

 

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Why do Home Remodeling Contractors Need Surety Bonds?

contractor with laptop

If you do business in a state or other jurisdiction that requires home remodeling businesses to be licensed, the state will likely require you to purchase a License and Permit bond.

This type of bond is provided by your business to guarantee that your business will adhere to the laws and regulations placed on the industry you work in. A license bond protects the licensing board in your state and consumers you work for from fraudulent business practices.

If your remodeling project is going to involve your business buying supplies on behalf of your customer or the hiring of subcontractors to get the project completed as promised, your customer may ask you to purchase a Performance Bond that guarantees the completion of the project and a Payment Bond guarantees that material suppliers and subcontractors are paid in full when the job is completed.

If your business fails to pay any suppliers or contractors, your customer can demand the unpaid materials, and subcontractors are paid by the Surety Company that issued the bond.

 

Important Note: A bond and an insurance policy are not the same. If a bond is redeemed by your customer, your business will be required to reimburse the surety company but with insurance coverage, no reimbursement is required.

 

How to Get the Best Rates on Commercial Insurance and Bonds

 

As in any type of insurance product, some companies and brokers perform better than others. Although you can verify the financial stability of any commercial insurance company, determining the financial stability of an insurance broker will be difficult.

If you are contemplating remodeling a kitchen, bathroom, or even adding a room, you can choose an independent insurance broker who represents highly-rated insurance companies and has the experience to provide an affordable insurance package to protect you and your remodeling business.

Fairbanks Insurance Brokers is a leader in the commercial insurance business and specializes in providing contractors with the finest and most affordable insurance solutions that will mitigate their everyday risks. Large or small, Fairbanks Insurance Brokers can provide you with the insurance products you need and they have been doing so for a decade.

Fairbanks is an independent insurance brokerage that represents only highly-rated companies. Since are not employed by any of the insurers they represent, they can put the needs of their clients first and foremost.

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